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The European Union’s CSRD will soon have significant implications for Swiss companies. Although Switzerland is not part of the EU, many Swiss companies will be affected—directly or indirectly—by this new regulation. In light of these impending changes, it is crucial for Swiss SMEs to start preparing now. Anticipating the implementation of the CSRD will not only enable you to comply with future legal requirements but also to take advantage of the opportunities offered by more sustainable business practices.
What is the CSRD, and why is it important?
The CSRD is a European directive aimed at harmonizing and strengthening sustainability reporting requirements for companies. It replaces the current Non-Financial Reporting Directive (NFRD) and significantly expands its scope. The main objective is to improve the transparency and comparability of the information provided by companies on environmental, social, and governance (ESG) issues.
For Swiss companies, the significance of the CSRD lies in its potential impact on their operations, particularly for those with business ties to the EU. Although Switzerland is not directly subject to this directive, the Federal Council has announced its intention to adapt Swiss law accordingly. According to the report by the Federal Department of Justice and Police (FDJP) dated September 22, 2023, Switzerland plans to align its requirements with those of the CSRD to maintain its international competitiveness and facilitate its companies’ access to the European market.
Scope of the CSRD for Swiss Companies
Although the specific details of Switzerland’s implementation of the CSRD have not yet been finalized, the Federal Council has provided guidance on its likely scope of application. According to the guidelines set out on September 22, 2023, the following criteria are expected to apply:
- Companies with at least 250 employees (compared with 500 under current law)
- Balance sheet total of CHF 25 million (currently CHF 20 million)
- Sales of 50 million francs (currently 40 million)
These thresholds are lower than those currently in force in the Swiss Code of Obligations (CO), which means that a greater number of Swiss companies will be affected. It is important to note that micro-businesses (with fewer than 10 employees) will be exempt from these obligations.
Key Reporting Areas Under the CSRD
The CSRD requires companies to provide detailed information on four main areas:
Environmental issues :
You’ll have to account for your impact on climatebiodiversity, resource use and the circular economy. Particular emphasis will be placed on your efforts to achieve the goal of zero net greenhouse gas emissions by 2050, in accordance with the Federal Law on Climate Protection Objectives (LCl).
Social and personnel issues :
This section includes information on working conditions, social dialogue, diversity and inclusion. In particular, you’ll need to address equal opportunities, ongoing training and occupational health and safety, based on the relevant International Labor Organization (ILO) conventions.
Human rights :
You will be required to describe your policies and procedures for identifying, preventing and mitigating human rights risks in your operations and supply chain. This section will draw on international conventions ratified by Switzerland, such as the International Covenant on Economic, Social and Cultural Rights.
Governance and the fight against corruption :
You’ll need to detail your governance structure, remuneration policies and anti-corruption measures. This will include information on the composition and role of the Board of Directors in managing sustainability issues.
Key Steps to Prepare for the CSRD
To effectively prepare for the implementation of the CSRD, here are the key steps to follow:
- Current state assessment: Start by carrying out a comprehensive diagnosis of your current sustainability practices. Use tools such as the EcoEntreprise self-assessment or the B Impact Assessment to get a clear picture of your situation.
- Identifying Gaps: Compare your current practices with the CSRD requirements to identify areas that need improvement. Pay particular attention to aspects that are not covered in your current reports.
- Implement a sustainability strategy: Develop a global strategy aligned with the United Nations Sustainable Development Goals (SDGs). Integrate this strategy into your business model and decision-making processes.
- Data collection and analysis: Set up robust systems to collect and analyze relevant ESG data. This may include using specialized software or training your staff in new data collection methods.
- Stakeholder engagement : Involve your employees, suppliers and customers in your sustainability approach. Their participation will be crucial to obtaining reliable data and implementing meaningful change.
Choice of reporting standards and verification
Switzerland plans to offer companies the choice of applying the European Sustainability Reporting Standards (ESRS) or other equivalent standards. The Federal Council will designate these equivalent standards, which could include the standards of the Global Reporting Initiative (GRI) or theInternational Sustainability Standards Board (ISSB).
With regard to verification, sustainability reports will have to be audited by an approved auditing firm or conformity assessment body. For public-interest companies (such as those listed on the stock exchange), the audit will have to be carried out by an auditing firm subject to state supervision. For other companies, an accredited auditor will suffice.
Advantages of anticipation for Swiss SMEs
Preparing for the implementation of the CSRD offers several advantages for Swiss SMEs:
- Improved competitiveness: By adopting sustainable practices, you’ll stand out in the market and meet the growing expectations of customers and business partners.
- Attracting investors and talent: A strong commitment to sustainability can attract responsible investors and talented employees keen to work for companies aligned with their values.
- Risk reduction: Proactive management of ESG issues will help you anticipate and mitigate regulatory, reputational and operational risks.
- Innovation and efficiency: Implementing sustainable practices can stimulate innovation and lead to greater operational efficiency, reducing your costs in the long term.
To conclude
The introduction of the CSRD in Switzerland represents a major change for many companies. Although the details of its implementation have not yet been finalized, it is clear that sustainability reporting requirements will become more stringent. By preparing now, you will not only comply with future regulations but also position your company as a responsible and innovative player in the Swiss and international markets.
There are many resources available to support you in this transition. Don’t hesitate to enlist the help of experts to guide you through this crucial step for the future of your company.
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